October 06, 2007	Saturday	Ramazan 23, 1428

LONDON, Oct 5: The giant takeover battle for ABN Amro took a fresh twist on Friday after British bank Barclays pulled out, paving the way for a rival bid from a European consortium led by the Royal Bank of Scotland.

The RBS consortium’s offer, worth about 71bn euros ($101bn), expired on Friday. A source close to the matter said RBS will reveal the level of ABN shareholder support early next week.

British bank Barclays acknowledged that it had failed to win sufficient support to buy the Dutch bank for around 62.5bn euros.

Both bids were records for the European banking sector.

The RBS consortium also comprises Belgian-Dutch group Fortis and Spain’s Banco Santander.

In a statement, Barclays said that not all the conditions relating to its offer were fulfilled. “As a result, Barclays withdraws its offer with immediate effect,” it added.

In Amsterdam, ABN Amro spokesman Neil Moorhouse said the bank understood the decision and expressed ABN’s “appreciation for the cooperation efforts and confidence Barclays showed in ABN Amro.”

The RBS bid is more attractive because it is higher and mainly in cash, compared to the Barclays offer, which was mostly in shares.

However, ABN Amro chairman Rijkman Groenink has not recommended either takeover bid to shareholders.

Last month, he had criticised the Barclays offer as being too low, while hitting out at the consortium’s plans to break up ABN.

The RBS-led grouping wants to take apart ABN Amro and share its assets among its members.

Barclays, on the other hand, had wanted to merge ABN Amro’s operations with its own to create a vast global group.

Under the consortium deal, Santander would take over ABN’s Italian and Brazilian operations, while Fortis would assume its retail banking division based in the Benelux countries.

RBS would take cash from the sale of ABN’s US unit LaSalle as well as the group’s institutional banking business.

ABN had said Monday it had finalised the sale of LaSalle to Bank of America for $21 billion.

The consortium’s offer for the Dutch bank is pitched at 38.40 euros per ABN Amro share and is 93 per cent in cash.

Prior to Friday, Barclays, Britain’s third-biggest bank, had seen its share price hit by the global credit squeeze -- which had dented the value of its mainly-shares offer.

Barclays’ original bid for ABN Amro was worth 67 billion euros before the group’s share price hit reverse gear.

Initially, ABN Amro management had backed the Barclays takeover bid, but withdrew its support in June after the RBS consortium put more cash on the table.

On a positive note, Barclays said on Friday that it had requested payment from ABN Amro of its “break” fee totalling 200 million euros -- which was far higher than the cost of its bid.

“I thank Barclays shareholders and employees for their overwhelming support for this transaction over the past months,” Barclays chief executive John Varley said in his company’s statement.—AFP